How can I buy my first home?

Buying your first home is becoming increasingly difficult, something I am sure you are acutely aware of. There are ‘First Time Buyer’ guides out there, which will give you the facts about buying your first home but there is a lot they do not say. This is some of that information that you will need to be aware of because it could make the difference between a successful first home purchase or not. Either way, it could certainly save you some money.

You plan to succeed in your home ownership goal is essential if you want to jump on the property buying ladder. These essential steps and tips are outlined below.

In the first instance, you must check your own Experian report and then apply to delete old or paid up charges that are still showing. If you need to question your report, than do so. If this is done early on in your plan, you will have time for your report to be seen as ‘clean’ when the mortgage lender checks it. Furthermore, if you have no credit record because you have never needed one, now is the time to get a card in your name, even if you never use it.

Once your report is favourable, search for a mortgage lender but do not automatically think that your bank or building society have the best option for you. They may not and this will become evident to you if you carry on reading.

A good independent financial advisor or mortgage advisor will help you greatly if you know the right questions to ask. We have one at Bear Estate Agents but this article isn’t about getting you to use only him but more importantly, getting you to use an accredited independent mortgage advisor who can answer the questions asked. For example, you know that you will need a deposit but did you also know that the greater the deposit you have, the higher the number of mortgages you have access to which have lower, preferable rates, making affordability easier?

Affordability has now become key to the mortgage lender. Once upon a time, a lender would work out their level of lending by multiplying a single person’s or couple’s salary by a given amount. Some lender’s still do use background multiples of salary which are usually 4.5 times salary for a single applicant or 3.5 times joint salaries. There are some mortgage lenders which will even do 5 X salary…ask you mortgage advisor whom they are. This method is a good way to find out what amount you may be offered which will help you to decide whether or not buying a property is within your reach. Again, ask your mortgage advisor before you start paying any fees. Nevertheless, it will be the affordability of a mortgage (which is where the interest rate offered plays a big part) which is now looked at by mortgage lenders.

This means that yours and your partner’s net income per month, minus your outgoings per month, will be looked at to see if you can afford a mortgage.

Don’t forget, if you have been lucky enough to have been offered help with your deposit and you have accepted this help, make sure that this financial help comes in the form of a gift and not a loan. Your mortgage lender will need to see a signed form attesting to this.

You may also be able to obtain a mortgage with a longer term than the average 25 years. Some lenders have increased the outer age limit to 80 and 85 years.

As part of your steps to success, study your bank statements and decide what spending is unnecessary, because at least three months of the most recent, will be looked at by your chosen lender. Lenders are quite relaxed about small regular outgoings such as gym membership but if you are a shopaholic or dine out frequently on a card, this may be deemed excessive and your mortgage declined.

In the same way, get your credit cards transferred to a low interest rate so that you can show you manage them wisely if you cannot pay them off.

At this point, when you have done everything you can to attract a mortgage lender and you have been offered a good deal in principle and found a property where your offer has been accepted, there may be one final hurdle to get over. This is the mortgage valuation survey. In today’s property market, where property prices have risen steeply, there exist differences between what the market value of a property is and what the historic value a lender’s surveyor believes it to be worth. I broach this subject in detail at http://www.bearestateagents.co.uk/bearshout/valuations-properties-essex/

Suffice to say that some mortgage lenders use surveyors that will only look at the historic value as their guide lines. When choosing your mortgage lender, find out who will be carrying out the valuation survey. Your mortgage advisor will know and so will your estate agent.

If the property you desire is down valued and you cannot afford to make up the difference between this valuation and the agreed sale price of the property, then you may have accrued costs for nothing. Sometimes a vendor will renegotiate a price, but not always. Ask your mortgage advisor about this before it happens.

A mortgage advisor will help you choose a lender wisely if you ask the right questions. Save as much money as you can and accept help for your deposit if it is offered. Make sure your bank accounts don’t show excessive spending and action all of these things BEFORE you start your search for your first home. Asking the right questions and acting on the answers will save you spending on unnecessary fees … plan to succeed and be patient with your plans in order to make it happen.

Coming soon…100% mortgages are making a comeback…get the ‘heads up’ on how to get one.